SmartyPig Review – SmartyPig is Smart Banking

by Ryan Guina

SmartyPig is one of the most unique online banks, and I mean that in a good way. What is SmartyPig? In their words, “SmartyPig is a free online piggy bank for people saving for specific financial goals like a wedding, a vacation or a flat-screen TV. Even if your goal is saving for a rainy day, SmartyPig is here to help you reach that goal faster and give you the most money for your money when you get there.”

In a nutshell, SmartyPig is an online bank that offers higher than average interest rates and uses savings goals to keep members engaged.

You choose the savings goal and time line, and Smarty Pig will help you track your progress, give you the motivation to help you reach your target, and makes it easy to have others help you reach your savings goals. Yes, you read that last benefit correctly! Read on – there are more great benefits to opening a SmartyPig account!

While SmartyPig may be the way to go for some, we recommend checking out all your options first. SmartyPig is focused on discrete savings goals, but may not offer interest rates as high as other online banks, such as Discover Savings, or the full-service features of Chase Bank. Read on to learn what differentiates SmartyPig from other online banks..

Smarty Pig Review

What follows is a full overview of SmartyPig – the areas where SmartyPig excels compared to other online banks, and the areas where it falls short.

How SmartyPig Works

SmartyPig is designed for reaching financial goals and you are required to choose a savings goal when you open your SmartyPig account. Once you choose your goal you can set up automatic transfers from another online savings or checking account to your SmartyPig account. These transfers will continue until you reach your savings goal. You can then withdraw your savings via an ACH withdrawal (free transfer to your savings or checking account), a SmartyPig debit card, or you can redeem your savings for discounts of up to 11% on gift cards from major retailers such as Amazon, Travelocity, and more. You can even split your redemptions among several options. Each of these options is free.

Among highest interest rates in US. Right now the interest rate at SmartyPig is among the highest interest rates in the US, and to top it off, your savings are FDIC insured, which means you have nothing to lose by opening a SmartyPig account.

Opening a Smarty Pig account

Unlike most online savings accounts, which simply request your basic personal information and an opening deposit, SmartyPig requires you to actually set a savings goal before you can open your account. No worries, though. You can simply name it “summer vacation,” or “Christmas savings,” and get started.

You will also need the standard personal information required by virtually all financial institutions. You can see which items are required in the photo to the right.

Sharing your financial goals

SmartyPig allows you to share your savings goals with others, not only for moral support, but for financial support. SmartyPig is the only bank I know of which allows others to quickly and easily helps friends and family reach their savings goals. This is a great opportunity for helping kids reach savings goals, or for other reasons.

You can authorize SmartyPig to access your FaceBook or Twitter account to post updates to your wall any time you add funds to your account. This will include a link to your savings goal page which will allow others to donate to your savings goals. Of course, you do not have to use this option, and you can elect to inlcude none, some, or all of your savings goals for the updates. You can opt in or out at any time.

About SmartyPig’s interest rates

SmartyPig offers interest rates among the highest in the US. However, those rates may not be the absolute highest one can earn, andfunds are tied up in a savings goal and may not be accessible as quickly as they may be in other types of accounts.

SmartyPig also used to cap the balance at which one could earn the highest interest rates. For example, balances of $0.00 – $50,000.00 would earn the highest rate, while larger balances would earn a lower interest rate. That is not currently the case, bit the website does note that interest rates may change at any time without prior notice.

SmartyPig Changes Over Time

I opened my SmartyPig in early 2010. Like many other people, I was intrigued when SmartyPig launched – they offered interest rates which were substantially higher than virtually every other bank on the market. Unfortunately, it was unsustainable.

In late 2010, SmartyPig transferred customers’ deposits to BBVA Compass Bank. SmartyPig was forced to decrease interest rates which made their account less competitive given the constraints on their business model.

In 2016, it was announced that SmartyPig would transfer all account deposits to Sallie Mae Bank. This shouldn’t have any immediate impact on users. But it’s important to know where your deposits are held.

SmartyPig is Smart Banking

SmartyPig offers best in class interest rates, and it is the only bank I know of that offers social funding. Add in great rewards when you reach your savings goals and other benefits and you have a winning combination.

To wrap it up:

  • Higher interest rates
  • Bonuses for gift card redemptions
  • Social funding
  • FDIC insured

Sounds like quite a few benefits worth looking into. Check out the SmartyPig website for more information.


Published or updated September 29, 2016.
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{ 10 comments… read them below or add one }

1 myfinancialobjectives

Wow that interest rate is really awesome for accounts under $50,000! I have to admit, I am getting a bit tired of looking at my 1.10% with ING!

I also like the goal aspect of it, as well as the updates for Facebook. They have got an excellent advertising team it seems!

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2 pamela

did you know that once you reach your goal you can STILL add to that account? You don’t need to close it. I reached a goal, decided to see what would happen if I manually tried to add money and it worked. I have since added 4 more times.

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3 Dan

How are they able to double the market rate??

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4 Ryan

I’m not exactly sure, but I believe it is because they limit the highest interest rate to $50,000; anything above $50,000 in deposits reduces the interest rate for the entire account, not just the amount above $50k. Because the deposits are tied to goals, it is somewhat similar to a short term CD. The bank knows that in all likelihood, the deposits will remain within the account for an average of “x” number of days, so they can turn around and lend it at a higher interest rate. A win-win for everyone involved.

The best part is all deposits are FDIC insured and are handled by West Bank from Iowa, a financial institution that has been around since 1893. Edit to add: As of August 1, 2010, SmartyPig will be transferring all current accounts to Compass Bank, which is a larger bank, more capable of handling the growing requirements of SmartyPig’s customer base. You can read more about the change here.

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5 Erik

However, I do not think that they themselves are FDIC insured. Read the fine print.

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6 Ryan

Erik, the SmartyPig accounts are managed by West Bank, a financial institution that has been around since 1893. Based on on everything I have read, the funds are FDIC insured. I am interested to see where it states deposits are not FDIC insured. Edit to add: As of August 1, 2010, SmartyPig will be transferring all current accounts to Compass Bank, which is a larger bank, more capable of handling the growing requirements of SmartyPig’s customer base.

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7 Erik

This article from the NY Times shows how SmartyPig makes money, and also shows they are FDIC insured.

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8 Veronica

Smarty Pig SUCKS – you can’t withdraw partial funds –
if you want to close a goal you can only deposit back into the account the money the account came from even if you have done transactions with other banks with them. Their interface is POORLY DESIGNED – Customer Service were really RUDE too the lady started yelling at me. RUN don’t walk away from Smarty Pig.

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9 Briana

I’ve considered closing my SmartyPig account as well, just haven’t gotten around to it. Also thinking about an ING Direct account for my primary savings.

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10 Ryan

I’ve had an ING Direct account for years now – it’s a great account with many solid features. I also recommend looking into Ally Bank and Discover Bank for their features and interest rates.

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